Fortescue to offload stake in rail, ports
Fortescue Metals Group is on track to announce the sale of a stake in its rail and port business by the middle of the year, according to chief executive Nev Power.
Speaking in Hainan, Mr Power said there was strong interest in The Pilbara Infrastructure (TPI) business and although it was not a "must deal" situation, Fortescue was hoping for a sale "to accelerate our debt pay-down and move towards an investment-grade credit rating," he said. "By mid-year we will get the process completed.
"The company would then look at completing 155 million tonnes a year of iron ore production."
Some analysts estimate the selldown of TPI could fetch as much as $5 billion depending on the structure of the deal, including whether the rail and port is opened up to other iron ore miners.
Mr Power said he was confident the next two decades would be strong and iron ore prices over the next few years would remain above $110 a tonne.
"It is hard to predict five years out, but for the foreseeable future nothing will shock or impact the price for some time," he said.
Fortescue aims to increase iron ore production to 155 million tonnes a year, with more than 90 per cent going to China.
Mr Power said the urbanisation of China was a critical driver of the Chinese economy that required steel and iron ore.
He said Chinese President Xi Jinping made an encouraging speech at the Boao conference on Sunday, focused on lifting China out of poverty.
"President Xi's comments were reassuring in the underlying demand for steel in China for some decades to come," Mr Power said.